Free Debt Consolidation For Students |
|
Students, it's time for you to head for
free debt consolidation. All you students who graduated last spring with federal student loans, it's time for you to pay back the money. Your grace period of six months is nearing completion and the money, at an average of $16,600, needs to be paid back. Add to it the credit card debts, at an average of $2,000, and perhaps the payments on your new car too, and you're in a fix. So, how to balance all these simultaneously? The answer is free debt consolidation. Bruce Carter, 33, is an expert in student loans. He's paid back around $7,500 from his first stint in college more than a decade ago. Just two years ago, he returned to college to complete his degree in business administration; he graduated with more than $20,000 in outstanding loans. But Bruce is wiser this time. Even before he begins to repay, he plans to go for a free debt consolidation to consolidate his loans from three different lenders into a new loan from just one lender, and also to prolong the duration of payment term from the usual 10-20 years. Per his calculations, the loan consolidation will reduce his monthly payments by 40%, bringing down his monthly payments to $200-$250. That will enable him to pay back his more expensive car loan sooner. Bruce's calculated strategy to pay off his more expensive loan first and then concentrate all his resources on the remaining is the wining feature of free debt consolidation. The outstanding amount of a credit card with 18% interest is a much heavier burden than a student loan. The highest rate on outstanding student loans is presently 8.25%. If student loans are the only liability you have, first concentrate on those with the highest rate. Even with a tight budget, consider investing some of your resources if it gives you a higher return than the interest you're paying on your loan. Standard repayment plans for student loans consist of equal monthly payments and a ten-year payback period. If that's not what you want, call your creditor before the grace period ends and ask about other repayment options. Bruce, for example, is a primary contender for free debt consolidation because he owes money to three different lenders at three different rates. By consolidation, the interest rate will be an average of all the loans, rounded up by one-fourth of a percentage point. Free debt consolidation experts always advise to begin with your present creditor and then shop elsewhere if you don't like the terms and conditions. For example, The U.S. Department of Education is offering a reduction in interest rates by 0.6% only for borrowers who consolidate before beginning repayment. Most lenders will also reduce their interest rates if you pay electronically, along with a reduction of two percentage points after you've made 48 consecutive and timely payments. If a free debt consolidation loan doesn't answer your needs, go for a graduated repayment plan, which begins with monthly payments that are about 50% of those under a standard plan. Payments gradually keep on increasing until each month you're paying more than you would under a standard plan. If you're expecting your salary to keep pace, there won't be any difficulty in making the higher payments also, but you may have problem qualifying for another loan later, such as a mortgage. You also end up paying more in interest, especially if your repayment takes more than ten years. With a simple modification, such as lowering the payment or increasing the term, a $25,000 loan can cost you $40,000. If your finances are too tight to opt either a standard or a graduated plan, several lenders will even extend your repayment period up to 30 years, with monthly repayments as low as $50. And finally, you can also go for an extended repayment plan that varies with your income. |
